The Fourth option
As Bang Your Head asserts, the “minimum wage” is a complex issue. I intend to analyze it in terms of power flows between individuals, government, and business in a future post.
However, now, I think we need to carefully examine the economic calculus that goes into a “minimum wage” increase. As outlined by BYH, when faced with a “minimum wage” increase employers can
Take a cut in profits or go into debt.
Pass costs on to the consumer.
Make do with fewer employees and fewer new jobs.
These are the standard options offered. However, in the U.S. in this century, there is a real and often ignored 4th option.
4. Hire more illegal workers.
Every economic decision involves a risk-benefit analysis. A “minimum wage” hike makes hiring legal workers less attractive. However, illegal workers aren’t bound by these criteria. The “minimum wage” is not a true minimum since there are so many in the work force willing and able to work for less. Consequently, a “minimum wage” increase could force jobs from legal Americans into the hands of the over 10 million illegals already here and provide incentive for more to come. This incentive is enhanced by the fact that lawmakers continue to talk of amnesty and pathways to legal citizenship. So, an illegal knows that if they tolerate these poor wages for a while, they may someday get access to the juicy, elevated “minimum” wage.
The question then becomes, is this 4th option an intended or unintended consequence of the proposed changes. One could argue that coupled with our immigration policy and proposed paths to citizenship, those on the left are indirectly throwing jobs at illegals now with the implied offer of much more to come once pathways to citizenship open up. Alternatively, without seeking to fix immigration policy, a minimum wage increase could be a sign to business that it continues to be acceptable to hire illegals in droves.
Regardless of the intent, the effect is real. We must consider the 4th option in assessing changes to the minimum wage.
However, now, I think we need to carefully examine the economic calculus that goes into a “minimum wage” increase. As outlined by BYH, when faced with a “minimum wage” increase employers can
Take a cut in profits or go into debt.
Pass costs on to the consumer.
Make do with fewer employees and fewer new jobs.
These are the standard options offered. However, in the U.S. in this century, there is a real and often ignored 4th option.
4. Hire more illegal workers.
Every economic decision involves a risk-benefit analysis. A “minimum wage” hike makes hiring legal workers less attractive. However, illegal workers aren’t bound by these criteria. The “minimum wage” is not a true minimum since there are so many in the work force willing and able to work for less. Consequently, a “minimum wage” increase could force jobs from legal Americans into the hands of the over 10 million illegals already here and provide incentive for more to come. This incentive is enhanced by the fact that lawmakers continue to talk of amnesty and pathways to legal citizenship. So, an illegal knows that if they tolerate these poor wages for a while, they may someday get access to the juicy, elevated “minimum” wage.
The question then becomes, is this 4th option an intended or unintended consequence of the proposed changes. One could argue that coupled with our immigration policy and proposed paths to citizenship, those on the left are indirectly throwing jobs at illegals now with the implied offer of much more to come once pathways to citizenship open up. Alternatively, without seeking to fix immigration policy, a minimum wage increase could be a sign to business that it continues to be acceptable to hire illegals in droves.
Regardless of the intent, the effect is real. We must consider the 4th option in assessing changes to the minimum wage.
posted by Average guy | 11:34 AM
2 Comments:
There is only one problem I see with trying to effect change by increasing awareness of "The Fourth Option." It requires an audience with enough economic intelligence to appreciate the first three options.
The issue facing the "minimum wage" debate, as with most debates, is that it is fought between the thinkers and the feelers. Of course, the thinkers recognize that the minimum wage serves a purpose and is determined by the market. But when you're dealing with the feelers who will retort "You can't buy a house on a lake making only $5.15/hour and that's the American dream we are all entitled to, damnit!", then it doesn't even matter if you muster a fifth or sixth economic option.
But if you're lucky, you'll be able to CLEAN that house on lake while making your $5.15/hour...
I'm sure that serves nicely as American Dream option B.
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